January 29, 2018
CFTC Charges Trader Krishna Mohan with Spoofing and Engaging in a Manipulative and Deceptive Scheme
CFTC Seeks Permanent Injunction, Civil Monetary Penalties, Disgorgement, and Trading and Registration Bans
Washington, DC—The Commodity Futures Trading Commission (CFTC) today announced the filing of a federal court enforcement action in the U.S. District Court for the Southern District of Texas against Krishna Mohan of New York City, New York, charging him with spoofing (bidding or offering with the intent to cancel before execution) and engaging in a manipulative and deceptive scheme in the E-mini Dow ($5) futures contract market on the Chicago Board of Trade and the E-mini NASDAQ 100 futures contract market on the Chicago Mercantile Exchange.
CFTC’s Director of Enforcement Comments
James McDonald, the CFTC’s Director of Enforcement, stated: “As alleged here, over just a multi-week period, the Defendant placed tens of thousands of spoof orders in some of our most heavily traded markets. The Defendant placed these fake orders to trick market participants into trading with him at a better price than he otherwise could have obtained. As this case shows, the CFTC is dedicated to identifying those responsible for spoofing in our markets and holding them accountable.”
The CFTC Complaint alleges that, as part of his manipulative and deceptive scheme, from at least November 25, 2013 to December 17, 2013, Mohan repeatedly engaged in manipulative or deceptive acts or practices by spoofing in accounts owned by his former employer, a proprietary trading firm. The Complaint further alleges that Mohan executed his scheme by placing at least one iceberg order (whose order quantity is only partially visible in the order book) on one side of the market that he intended to execute and separately placing one or more fully visible orders on the opposite side of the market that he intended to cancel before execution (spoof orders). In placing his spoof orders, Mohan intentionally or recklessly sent false signals of increased supply or demand designed to trick market participants into executing against the orders he wanted filled.
Additionally, according to the Complaint, Mohan’s Google Drive folder contained documents describing certain spoofing strategies. For example, one such document references a “Smart Stuffing book (order cancel replace),” which would:
“allow [the] trader to control which side they want to show [the] bluff” and explained that “[a]ll those [bluff] orders are not mean[t] to be traded.”
As alleged in the Complaint, Mohan carried out his scheme through a pattern of conduct that was designed to benefit financially from market participants’ reactions to his spoof orders, which he intended to cancel. Mohan engaged in the pattern approximately 1,500 times, which included more than 36,000 discrete instances of spoofing.
In its continuing litigation, the CFTC seeks civil monetary penalties, permanent registration and trading bans, disgorgement, and a permanent injunction against further violations of the Commodity Exchange Act and CFTC regulations, as charged.
The CFTC’s Enforcement Division acknowledges and thanks the staff of the Market Regulation Department of the CME Group, the U.S. Department of Justice, and the Federal Bureau of Investigation for their assistance.
This case is brought in connection with the CFTC Division of Enforcement’s Spoofing Task Force, and the staff members responsible for this case are Peter Riggs, Rebecca Jelinek, Rachel Hayes, Allison Sizemore, Stephen Turley, Joyce Brandt, Christopher Reed, and Charles Marvine.
Last Updated: January 29, 2018